SDX Energy Plc (AIM: SDX), the MENA-focused oil and gas company, is pleased to provide an update on drilling operations in Morocco and Egypt.
· Play-opening BMK-1 well in Morocco reached depth of 1,551 meters, encountering commercial quantities of gas in both target horizons.
· Confirms Morocco core productive area extends north, de-risking c.20 bcf of P50 prospective resources.
· Expected to significantly extend reserve life and support lower CO2 emissions at our customers.
· Rig now moves to Lalla Mimouna concession to drill potentially play-opening LMS-2 well.
· SD-6X in Egypt not found to be commercially viable; results being analysed.
· SD-12X in Egypt expected to spud in the next two to three weeks, targeting 33 bcfe and not anticipated to have any technical read across from SD-6X.
The BMK-1 well in Morocco has been drilled to a measured depth of 1,551 meters and has encountered commercial quantities of gas in both target horizons. The Upper Guebbas was encountered at a measured depth of 1,190 meters, while the Lower Guebbas was penetrated at a measured depth of 1,475 meters.
Following the OYF-2 discovery which was announced on 28 January 2020 and successfully tested last week, and this BMK-1 discovery, the Company can confirm that the prospectivity in its existing core production and development area extends to the north. As a result, management estimates that, based upon these well results and the existing 3D seismic over the area, the Company has opened a new play fairway and de-risked up to 20bcf of P50 close-by prospective resources for future drilling of which approximately 10 bcf is located in and around BMK-1. See below a link to a map of the area.
Using Measurement While Drilling ('MWD') tools, management estimates that BMK-1 encountered a total of approximately 0.9 bcf of gas in the Upper and Lower Guebbas targets, in line with pre-drill estimates. However, due to down-hole issues, only the Upper target was wireline logged and will be completed. Management estimate that the Upper target has approximately 0.4 bcf of recoverable gas and that the gas in the Lower target will be recoverable during the development of the new play fairway de-risked by the OYF-2 and BMK-1 wells.
T he rig will now move to the Lalla Mimouna concession to drill the potentially play-opening LMS-2 well. With the drilling of this tenth well, the Company will have fulfilled the three objectives of the campaign which were; (i) to add reserves in and around its existing infrastructure; (ii) to determine if its existing producing area extends to the north; and (iii) to test the prospectivity within the Lalla Mimouna concession. Furthermore, given that the last two planned wells would not have been immediately tied into the Company's infrastructure or contributed cash flows in the near term, the Company has decided to preserve its capital and postpone these last two wells, at no incremental cost, for a future campaign. Given all of this, the campaign will conclude after LMS-2.
South Disouq (SDX Working Interest 55% and operator)
The SD-6X (Salah) exploration well at South Disouq, Egypt has been drilled to a total depth of 3,167 meters. The well encountered 1.7 meters of net gas bearing sand in the Kafr El Sheikh Formation (average porosity 34%), 1.0 meter of net gas bearing sand in the Abu ‐ Madi Formation which has 143 meters of high quality net reservoir (average porosity 24%) and 258 meters of high quality net reservoir in the Qawasim Formation (average porosity 20%). The gas sands in both the Kafr El Sheikh and Abu Madi were deemed to be sub-economic and the Qawasim has low gas saturation. The thinner than expected gas columns in SD-6X encountered is attributable to the absence of a sealing mechanism in the stratigraphic traps being targeted by the well. The well results are currently being analysed.
The rig will now move to the site of the next drilling location on the South Disouq licence, the SD-12X (Sobhi) exploration well, which is to the north and structurally updip of the Ibn Yunus discovery and the SD-6X well.
The result of SD-6X is not anticipated to have any technical read across to SD-12X which is targeting a management estimate of 33 bcfe and which is expected to spud in the next two to three weeks.
Mark Reid, CEO of SDX, commented:
"The BMK-1 result in Morocco is excellent news, confirming that together with the OYF-2 discovery in January, we can now plan to develop a material and valuable new prospective area to the north of our existing infrastructure in a market where we are the only gas producer and where we receive gas prices of between $10-12 per mmcf. An additional 20 bcf of P50 prospective resources has the potential to significantly extend reserve life and support lower CO2 emissions at our customers.
After the SD-6X well in Egypt, we can look forward to spudding the SD-12X well in the weeks ahead, where there is no expected technical read across from SD-6X."